Connecticut Life Producer Practice exam

What is the main objective of the Insurance Guaranty Association?

1. To improve policyholder services

2. To protect against insurer insolvency

3. To regulate insurance market prices

4. To monitor insurance producer conduct

The correct answer is: To protect against insurer insolvency

The main objective of the Insurance Guaranty Association is to protect against insurer insolvency. This association is designed to provide a safety net for policyholders in the event that their insurance company is unable to meet its financial obligations, typically due to bankruptcy or financial failure. When an insurer becomes insolvent, the Insurance Guaranty Association steps in to ensure that policyholders can still receive the benefits or claims they are entitled to under their policies. This protection is critical for maintaining consumer confidence in the insurance marketplace, as it reassures policyholders that their coverage will remain valid even if the issuing company encounters financial problems. The Insurance Guaranty Association often covers policies related to life, health, and property insurance, although the exact coverage can vary by state. The other options, while related to the broader insurance landscape, do not encapsulate the primary purpose of the Guaranty Association. Improving policyholder services and monitoring insurance producer conduct involves enhancing the overall consumer experience and adherence to regulations but does not directly address the needs arising from insurer failures. Regulating insurance market prices, on the other hand, falls under the responsibility of state insurance departments and does not align with the specific focus of the Guaranty Association.